Pelosi: House will review bill to delist Chinese cos. over audits
Speaker Nancy Pelosi said the House will review legislation that would impose restrictions on Chinese companies listed on U.S. stock exchanges but stopped short of promising a vote.
The California Democrat said in a Bloomberg Television interview Thursday that the legislation approved by the Senate that could lead to some Chinese companies being barred from U.S. stock exchanges passed with no debate so the House would have to give it careful consideration.
“We’ll review it in the House,” Pelosi said. “I’ve asked my committees to take a look at” the specifics.
She noted that it had overwhelming support from members of both parties in the Senate.
The Senate bill, introduced by John Kennedy, a Republican from Louisiana, and Chris Van Hollen, a Democrat from Maryland, was approved Wednesday by unanimous consent and would require companies such as Alibaba Group Holding Ltd. and Baidu Inc. to certify that they are not under the control of a foreign government.
Democratic Representative Brad Sherman of California introduced companion legislation in the House the same day, an indication that there’s likely to be bipartisan support there.
Amid increasingly tense relations between the world’s two largest economies, lawmakers are focusing on ways to put pressure on China from multiple angles, including its treatment of ethnic and religious minorities, censorship and its handling of the initial coronavirus outbreak in Wuhan.
“I take second place to no one in the Congress, House or Senate, in my criticisms over China,” Pelosi said, on issues of trade policies, human rights policies, or proliferation of weapons of mass destruction. “The fact is we have to have a relationship with China and we judge every action as to what it means to us, as well as what it means to them.”
Under the Senate legislation, if a company can’t show that it is not under control of a foreign government, or the Public Company Accounting Oversight Board isn’t able to audit the company for three consecutive years to determine that is the case, the company’s securities would be banned from the exchanges.
The legislation illustrates the rising bipartisan pushback against China in Congress that had been building over trade and other issues. It has been amplified especially by Republicans as President Donald Trump has sought to blame China as the main culprit in the coronavirus pandemic.
Trump escalated his rhetoric against China on Wednesday night, suggesting that leader Xi Jinping is behind a “disinformation and propaganda attack on the United States and Europe.”
Among other issues, members of Congress have raised red flags over the billions of dollars flowing into some of China’s largest corporations, much of it from pension funds and college endowments in search of fat investment returns. Alarm has grown in particular that American money is bankrolling efforts by the country’s technology giants to develop leading positions in areas including artificial intelligence, autonomous driving and internet data collection.
Lawmakers also said it was a matter of protecting investors.
“I do not want to get into a new Cold War,” Kennedy said on the Senate floor, adding that he wants “China to play by the rules.”
Transparency for investors
Van Hollen said it was a matter of giving investors “the transparency they need to make informed decisions.”
In introducing his House measure, Sherman said that Nasdaq moved this week to delist China-based Luckin Coffee after executives at the company admitted fabricating $310 million in sales between April and December 2019.
“Had this legislation already been signed into law, U.S. investors in Luckin Coffee likely would have avoided billions of dollars in losses,” he said in a statement.
At issue is China’s longstanding refusal to allow the PCAOB to examine audits of firms whose shares trade on the New York Stock Exchange, Nasdaq and other U.S. platforms. The inspections by the little-known agency, which Congress stood up in 2002 in response to the massive Enron Corp. accounting scandal, are meant to prevent fraud and wrongdoing that could wipe out shareholders.
Since then China and the U.S. have been at odds on the issue even as companies including Alibaba and Baidu have raised billions of dollars selling shares in American markets. The long-simmering feud came to the forefront last year as Washington and Beijing clashed over broader trade and economic issues, and some in the White House have been urging Trump to take a harder line on the audit inspections.
— Daniel Flatley, Billy House and David Westin, with assistance from Ben Bain, Colum Murphy and Edwin Chan